Dividend Income Growth 4

Near the end of July I talked about what would happen to your dividend income if you reinvested your dividends to buy more stocks. Then I was using possible samples. Today I want to talk about what actually would happen on the same basis using actual values and stock of Royal Bank and RioCan. I am comparing what my spreadsheet would calculate with what really could occur.

The main problem with my spreadsheets is that I am reinvesting dividends annually and in real life you would be reinvesting dividends quarterly. You would actually do better.

In the first table I am showing what dividends you would receive in the first year of holding these stocks. The columns are Original Dividend Yield, Dividend Growth, Income and Income with Reinvestment. The chart below shows year 1.

Stock	Ori Yield	Div Growth	Income	Rev Inc
RY SS	4.13%	11.56%	$528.00	$528.00
RY Actual	4.13%	11.56%	$528.00	$528.00
RIO SS	7.67%	2.92%	$860.00	$860.00
RIO Actual	7.67%	2.92%	$950.00	$950.00

In year 5 the following chart shows what the spreadsheet calculation is compared to what could have actually happened. You can see the income growing with reinvestment of dividends. In the last column I have shown what the increase in income would be.

Stock	Ori Yield	Div Growth	Income	Rev Inc	Increase
RY SS	4.13%	11.56%	$816.00	$967.57	18.57%
RY Actual	4.13%	11.56%	$912.00	$1,003.44	10.03%
RIO SS	7.67%	2.92%	$980.00	$1,325.21	35.23%
RIO Actual	7.67%	2.92%	$1,105.00	$1,654.40	49.72%

This next chart is for year 10.

Stock	Ori Yield	Div Growth	Income	Rev Inc	Increase
RY SS	4.13%	11.56%	$816.00	$967.57	18.57%
RY Actual	4.13%	11.56%	$912.00	$1,003.44	10.03%
RIO SS	7.67%	2.92%	$980.00	$1,325.21	35.23%
RIO Actual	7.67%	2.92%	$1,105.00	$1,654.40	49.72%

And in year 15:

Stock	Ori Yield	Div Growth	Income	Rev Inc	Increase
RY SS	4.13%	11.56%	$2,432.00	$4,262.44	75.26%
RY Actual	4.13%	11.56%	$3,200.00	$4,811.66	50.36%
RIO SS	7.67%	2.92%	$1,300.00	$3,693.10	184.08%
RIO Actual	7.67%	2.92%	$1,380.00	$3,995.18	189.51%

And in year 20:

Stock	Ori Yield	Div Growth	Income	Rev Inc	Increase
RY SS	4.13%	11.56%	$4,240.00	$9,024.87	112.85%
RY Actual	4.13%	11.56%	$4,344.00	$7,788.08	79.28%
RIO SS	7.67%	2.92%	$1,500.00	$6,172.78	311.52%
RIO Actual	7.67%	2.92%	$1,450.00	$5,431.55	274.59%

See the full spreadsheet here.

On my other blog I am today writing about ONEX Corp. (TSX-OCX, OTC-ONEXF) ... continue...

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.

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